IOC, OIL move for Congo assets suffers setback

A move by India's Indian Oil Corp. (IOC) and its partner Oil India Ltd. (OIL) to acquire French energy firm Maurel & Prom's (M&P) assets in the Republic of Congo (Brazzaville) has hit a stumbling block.

Shirish Nadkarni
OGJ Correspondent

MUMBAI, Mar. 28 -- A move by India's Indian Oil Corp. (IOC) and its partner Oil India Ltd. (OIL) to acquire French energy firm Maurel & Prom's (M&P) assets in the Republic of Congo (Brazzaville) has hit a stumbling block.

The state-owned combine had offered $1.5 billion, which was $66 million more than an existing offer from Italy's Eni SPA, for the assets in the producing M'Boundi and Kouakouala oil fields and a few other exploration areas in the Congo.

M&P owns 48.6% interest in M'Boundi oil field and 66% interest in Kouakouala A field. It was looking to sell these rights to Eni, along with 50% equity in Kouakouala B, C, and D blocks, and a 50% exploration interest in Kouilou.

IOC-OIL's bid was placed through UK-based Burren Energy, which is M&P's minority partner in the Congo assets and holds pre-emptive rights.

The Eni transaction fell through after Burren refused to waive its right of pre-emption to the stake. Burren has 31.5% equity in M'Boundi and a 25% interest in Kouakouala. It has been reported that the company wants to operate the Congo fields.

The tentative plan was that, by exercising its pre-emption right, Burren would acquire M&P's interest in the fields and then resell most of it to IOC-OIL combine through a back-to-back agreement.

As per the proposal, Burren was expected to block the old agreement between M&P and Eni, which would have seen the stake transferred for a total consideration of $1.43 billion. However, Burren has now withdrawn from negotiations with IOC and OIL, and the Indian duo believe that the "chapter is closed."

The oil fields have 1.4 billion bbl of OOIP and produce high-quality crude. Had the sale gone through, IOC-OIL would have added 17,000 b/d of oil production from the M'Boundi field in 2007. That figure was slated to increase to 28,000 b/d by 2010.

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